An aging analysis of Yamoto Limited’s accounts receivable at December 31, 2018 a
ID: 2540975 • Letter: A
Question
An aging analysis of Yamoto Limited’s accounts receivable at December 31, 2018 and 2017, showed the following:
Number of Days Outstanding
Accounts Receivable
Estimated Percentage Uncollectible
2018
2017
0-30 days
$300,000
$320,000
3%
31-61 days
64,000
114,000
6%
61-90 days
86,000
76,000
12%
Over 90 days
130,000
50,000
24%
Total
$580,000
$560,000
Additional information:
1. At December 31, 2017, the unadjusted balance in Allowance for Doubtful Accounts was a credit of $9,000.
2. In 2018, $42,000 of accounts were written off as uncollectible and $3,000 of accounts previously written off were recovered.
Required:
a. Prepare an aging schedule to calculate the estimated uncollectible accounts at December 31, 2017 and 2018. Note that the estimated percentage uncollectible are the same for both years.
b. Record the adjusting entry relating to bad debts on December 31,2017.
c. Record the write off of uncollectible accounts in 2018.
d. Record the collection of accounts previously written off in 2018.
e. Prepare the adjusting entry relating to bad debts on December 31, 2018.
f. Calculate the carrying amount (net realizable value) of Yamoto’s accounts receivable at December 31, 2017 and 2018.
Number of Days Outstanding
Accounts Receivable
Estimated Percentage Uncollectible
2018
2017
0-30 days
$300,000
$320,000
3%
31-61 days
64,000
114,000
6%
61-90 days
86,000
76,000
12%
Over 90 days
130,000
50,000
24%
Total
$580,000
$560,000
Explanation / Answer
Requirement a Aging schedule for calculation of estimated uncollectible accounts No of days Accounts Receivable in $ Estimated percentage Uncollectible Estimated Uncollectible accounts 2018 2017 2018 2017 0-30 days 300000 320000 3% 9000 9600 31-61 days 64000 114000 6% 3840 6840 61-90 days 86000 76000 12% 10320 9120 Over 90 days 130000 50000 24% 31200 12000 Total 580000 560000 54360 37560 Requirement b Amount in $ Date General Journal Debit Credit December 31, 2017 Bad-debts expense 37560 Allowance for Doubtful accounts 37560 To record the bad -debts expense for the year Requirement c December 31, 2018 Allowance for Doubtful accounts 42000 Accounts receivable 42000 To record the written off as uncollectible Requirement d December 31, 2018 Cash 3000 Accounts receivable 3000 Accounts receivable 3000 Allowance for Doubtful accounts 3000 To record the collection of accounts previous written off Requirement e December 31, 2018 Bad-debts expense 54360 Allowance for Doubtful accounts 54360 To record the bad -debts expense for the year Requirement f Calculation of carrying amount of accounts receivable 2018 2017 Gross amount of Accounts receivable 580000 560000 Less : Allowance for doubt debts 61920 46560 Carrying amount of accounts receivable 518080 513440
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